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DECREE No.20/1998/ND-CP OF MARCH 31, 1998 ON DEVELOPING COMMERCE IN MOUNTAIN AREAS, ON OFFSHORE ISLANDS AND IN ETHNIC MINORITY REGIONS

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Commercial Law of May 10, 1997;

At the proposal of the Minister of Trade,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Subjects and scope of regulation

This Decree provides for policies toward traders conducting commercial activities in mountain areas, on offshore islands and in ethnic minority regions, policies of supplying and consuming essential goods of great importance for production activities and life of the ethnic minorities living and operating in mountain areas, on offshore islands and in ethnic minority regions.

Article 2.- Application of related regulations

Besides the policies defined in this Decree, traders operating in the mountain areas, on offshore islands and in ethnic minority regions are entitled to other preferential policies stipulated by related legislation.

Chapter II

ENCOURAGING THE DEVELOPMENT OF COMMERCE IN MOUNTAIN AREAS, ON OFFSHORE ISLANDS AND IN ETHNIC MINORITY REGIONS

Article 3.- Encouraging the development of commerce in mountain areas, on offshore islands and in ethnic minority regions.

The State encourages and creates conditions for all organizations and individuals of all economic sectors to take part in the development of commerce in mountain areas, on offshore islands and in ethnic minority regions. To build economic ties among State enterprises and between State enterprises and traders of other economic sectors in order to form a system of goods circulation without hindrance from production to consumption.

Article 4.- Building markets and State trading shops or commercial-service cooperatives

Encouraging the building of markets with shops to buy and sell goods of the State trade service or commercial-service cooperatives at the groups of communes in mountain areas, on offshore islands and in ethnic minority regions. The building of markets in the groups of communes must be linked with the overall planning and plan of building centers of groups of communes suited to the distribution and density of population in the locality so that the markets may become real centers for transactions, contacts and trading of goods of the population in the area, creating conditions to promote the circulation of goods in each locality in mountain areas, on offshore islands, in ethnic minority regions and among the different areas in each region.

Article 5.- Groups of communes in the Program of building centers of groups of communes in the mountain and other highland areas.

For the groups of communes in the Program of building centers of groups of communes in the mountain and other highland areas under Decision No.35-TTg of January 13, 1997 of the Prime Minister, priority in investment shall be given to the building of markets in Step One of each project in order to form right from the outset a place for transaction, exchange and buying and selling of goods for the population in order to create conditions for expanding goods circulation, stimulating the development of production, contributing to the improvement and raising of the living conditions of the people in mountain areas, on offshore islands and in ethnic minority regions.

Article 6.- Groups of communes not yet in the Program of building centers of groups of communes in the mountain and other highland areas.

For the groups of communes not yet in the Program of building centers of groups of communes in the mountain and other highland areas by Decision No.35-TTg of January 13, 1997 of the Prime Minister, the People's Committee of the province shall consider and decide which groups of communes need investment to build markets and shall decide to earmark expenditures from the local budget to invest in the building of markets of an appropriate size in these communes.

Article 7.- Building markets in the cities, towns and townships in mountain areas, on offshore islands and in ethnic minority regions.

For the cities, towns, townships and other areas in mountain regions, on offshore islands and in ethnic minority regions with convenient communication lines and where the economy has developed to a given extent, the People's Committee in the province shall use appropriate forms to raise capital from businessmen or from State credit sources to provide medium and long- term loans at preferential interest rates, combined with the support from the State budget to invest in building markets and other material bases in service of commercial activities. The sales and rent of places of business in the markets and other lawful revenues from the markets are the source to pay back the capital raised in the above manner.

Article 8.- Allocating land, leasing land and exemption or reduction of land rent.

1. The State shall not collect land use rent when allocating land to organizations for building markets in mountain areas, on offshore islands and in ethnic minority regions.

2. Traders of all economic sectors engaged in commercial activities in mountain areas, on offshore islands and in ethnic minority regions shall be given priority consideration by the State in the allocation or renting of land in the locations and places convenient for their businesses, shall be granted certificates of land use right and in the exercise of their right and obligation of land users when they lease land under provisions of Article 13 and Article 14 of Decree No.85-CP of February 17, 1996 of the Government.

3. Traders operating in Region II shall be exempt from land rent in the first 5 years and enjoy a 50% land rent reduction in the five subsequent years as from the date of signing the land rent contract.

4. Traders operating in Region III shall be exempt from land rent to build and expand their business establishments.

Article 9.- Exemption and reduction of turnover tax and profit tax.

1. Traders operating in Region III in mountain areas, on offshore islands and in ethnic minority regions shall enjoy a 50% reduction of the turnover tax for a period of four years from the date this Decree takes effect, or from the first month of taxable turnover with regard to the traders who newly enter commerce or who have registered their business after this Decree takes effect. They shall be exempt from profit tax in the first four years after earning taxable profit and enjoy a 50% reduction of profit tax in the seven following years. They shall enjoy another 50% reduction of profit tax for two more years if they employ annually an average of 20 and more laborers.

2. Traders operating in Region II in mountain areas, on offshore islands and ethnic minority regions shall enjoy a 50% reduction of turnover tax on the turnover from the sale of items covered by social policies and agricultural and forestry products bought under the policy of transport subsidies for a period of four years after this Decree takes effect, or from the first month of their taxable turnover with regard to traders who have newly supplemented their business lines or who have newly registered these business lines; they shall enjoy exemption from profit tax in the first two years after earning taxable profit and a 50% reduction of profit tax to be paid over the five following years , and another 50% reduction of profit tax to be paid over two more years if they employ annually an average of 20 and more laborers.

3. Traders in Region I who directly sell items covered by social policies and traders directly operating in Region I and Region II in mountain areas, on offshore islands and in ethnic minority regions when selling other goods (outside those specified in Item 2, Article 9 of this Decree) shall enjoy a 25% reduction of turnover tax in the first 3 years after this Decree takes effect or from the first month of taxable turnover with regard to the traders who have newly supplemented their business range or who have newly registered their businesses. They shall enjoy exemption of profit tax in the first two years after making taxable profits and shall enjoy a 50% reduction of profit tax to be paid in the four following years. They shall enjoy a 50% reduction of the profit tax to be paid over two more years if they employ annually an average of 20 and more laborers.

4. Time for tax exemption and reduction is stipulated as follows:

a/ For turnover tax:

- For traders who have operated before this Decree is issued, the time for turnover tax exemption and reduction shall be counted from the date this Decree takes effect.

- For traders who operate after this Decree is issued, the time for turnover tax exemption and reduction shall be counted from the date they record a turnover.

b/ For profit tax:

It shall apply from the date this Decree takes effect.

Article 10.- Reduction of credit interest rate.

1. Traders who directly conduct commercial business in Region III in mountain areas, on offshore islands and in ethnic minority regions and who borrow from State-owned commercial banks shall enjoy a 30% reduction of interest rate of credits applicable to the mountain areas, offshore islands and ethnic minority regions announced by the State Bank.

2. Traders directly conducting trading activities in Region II in mountain areas, on offshore islands and in ethnic minority regions who borrow money from State-owned commercial banks shall enjoy a reduction of 15% of credit interest rate compared with the rate applicable to the mountain areas, offshore islands and ethnic minority regions announced by the State Bank.

The State Bank shall direct State-owned commercial banks to assure enough credit capital for the need of commercial activities in the mountain areas, on offshore islands and in ethnic minority regions.

Article 11.- Exemption of tuition on training and retraining of public servants and employees in commerce in mountain areas, on offshore islands and in ethnic minority regions.

Public servants in commercial agencies and officials and employees of commercial enterprises of all economic sectors operating in mountain areas, on offshore islands and in ethnic minority regions who are sent for training or retraining or professional upgrading in the system of the training schools funded by State budget to continue working in the mountain areas, on offshore islands and in ethnic minority regions shall be exempted from tuition.

Chapter III

PRICE SUBSIDIES AND FREIGHT TRANSPORT SUBSIDIES TO SELL ITEMS COVERED BY SOCIAL POLICIES, BUYING PRODUCTS PRODUCED IN MOUNTAIN AREAS,

ON OFFSHORE ISLANDS AND IN ETHNIC MINORITY REGIONS

Section 1- SELLING ITEMS COVERED BY SOCIAL POLICIES IN MOUNTAIN AREAS, ON OFFSHORE ISLANDS AND IN ETHNIC MINORITY REGIONS

Article 12.- Selling essential items with price subsidies and transport freight subsidies.

To ensure that the people living in mountain areas, on offshore islands and in ethnic minority regions can buy essential goods for production and living at the prices of goods of the same categories sold in the mountain towns, the State shall give price subsidies and transport freight subsidies for iodine salt, plant seeds and transport freight subsidies for lighting kerosene, writing paper for pupils, book distribution, medicaments, fertilizers, insecticides and anthracite as provided for in Articles 14 and 15 of this Decree.

The Prime Minister, basing himself on the need and policy of encouragement to economic and social development and at the proposal of the Commission for Nationalities and Mountain Areas, the ministries and related branches as well as the People's Committees of the mountain provinces or provinces which have one or more mountain districts, shall decide the modification of or addition to the list of items covered by social policies and enjoying price subsidies and transport freight subsidies in each period.

Article 13.- Defining norms for good supply.

The Commission for Nationalities and Mountain Areas shall work out the norms for supply of commodities per head of population covered by the policy of transport freight subsidies and price subsidies for each region in each period as basis for the organization of implementation.

Article 14.- Subsidies for transport charge and level of price subsidies.

1. For these items: iodine salt, plant seeds, lighting kerosene, writing paper for pupils, and medicaments, the distance to receive transport freight subsidies is from the goods delivery storage of the enterprise under central management at the nearest point in the locality not receiving transport and price subsidies to the groups of communes (announced by the Commission for Nationalities and Mountain Areas); for fertilizers, insecticides, anthracite, book distribution, the distance to receive transport freight subsidies is from the goods delivery storage of the enterprise to the centers of the districts in mountain areas, on offshore islands and in the districts in the regions of ethnic minorities.

2. Apart from the transport freight subsidies stipulated in Item 1 of this Article, iodine salt shall receive subsidies for the expenditures on mixing iodine into salt, expenditures on PE bags for packing iodine salt into small bags; plant seeds shall receive a price subsidy equal to the difference between the actual selling price to the farmers in the groups of communes and the price at which the enterprise buys them at the plant seeds centers plus the reasonable expenditures (minus the freight charge which has received freight subsidy) to supply the people in the mountain areas, on offshore islands and in ethnic minority regions.

Article 15.- Determining selling price and unit price for price and transport freight subsidies.

1. The Price Committee of the Government basing itself on the situation and transport conditions and the level of socio-economic development in each region shall lay down the principles for determining the maximum selling prices of the items with price subsidies and transport freight subsidies suited to the characteristics and the distance of actual transport in each locality so that the enterprises assigned with the task of supplying the main commodities have the necessary expenditures for transport, including transport by rudimentary means (if any) in the supply of commodities to the people in mountain areas, on offshore islands and in ethnic minority regions in a timely and convenient way.

2. The Presidents of the People's Committees of the provinces having localities in mountain areas, on offshore islands and in ethnic minority regions, basing themselves on the guidance of the Price Committee of the Government and the actual situation in the localities, and taking into consideration the necessity of having a separate place to sell goods under special preferential policies in each group of communes, shall determine the price or price frame for retail sales, the unit price for transport subsidy for each item according to each retail point.

The selling price and the sales of the price-subsidized and transport subsidized items must be posted up at each sale point so that everyone can know, supervise and inspect the implementation.

Article 16.- Determining the place for delivery and reception of goods with price and transport subsidies.

The Ministry of Trade shall assume the main responsibility and together with the Price Committee of the Government, the agency managing the lines of goods and the provinces having mountain areas, offshore islands and ethnic minority regions shall determine the stores for good delivery and the points of reception of goods with price and transport subsidies so that the population living in mountain areas, on offshore islands and in ethnic minority regions can buy goods covered by social policies in a convenient, and cost-effective manner for the State.

The agency managing the branches having price and transport subsidized goods shall have to direct the business units under its management to give priority to signing contracts and transporting the goods according to the quantity and time requested by the provinces in mountain areas, on offshore islands and in ethnic minority regions in order to meet in time the consumption needs of the population in the areas covered by the preferential policies.

Article 17.- Budget for price subsidies and transport subsidies in selling goods covered by social policies.

1. The budget used as price subsidies and transport subsidies of the items covered by social policies shall be deducted from the central budget sources and allocated to the provincial People's Committee in the form of "mandatory budget."

2. The budget used to provide price and transport subsidies for iodine salt shall be assigned to the national program against troubles caused by iodine salt deficiency. It shall be handled as follows:

a/ For the iodine salt which the locality produces on its own to cater for the locality, the budget for price and transport subsidies shall be allocated directly to the province in the form of "mandatory budget".

b/ For the iodine salt supplied by central enter-prises to the localities for sale to the population in mountain areas, on offshore islands and in ethnic minority regions, the budget for transport subsidies from the district center to the groups of communes shall be directly allocated to the province in the form of "mandatory budget". The support expenditures for mixing iodine salt and for transport subsidies to the district center shall be directly allocated to the central enterprise which handles this work.

3. If an enterprise which is assigned the task of selling items covered by social policies to the population in mountain areas, on offshore islands and in ethnic minority regions has not received budget for transport and price subsidization and has to borrow from the commercial bank to carry out this task, the enterprise shall be allotted the shortfall in the interest rate by the budget with regard to the amount it has actually borrowed from the time of goods delivery to the time when it is allotted the budget.

Article 18.- Drawing up the plan for selling goods with price and transport subsidies.

1. The Ministry of Trade shall assume the main responsibility and coordinate with the Commission for Nationalities and Mountain Areas, the Ministry of Planning and Investment, the Price Committee of the Government and the related Ministries and branches to determine the amount of goods, the unit prices for price subsidies and transport freight subsidies of each item in each specific locality as basis to determine the budget for price and transport freight subsidization.

2. The Ministry of Finance shall coordinate with the Ministry of Planning and Investment in including in the annual budget the budget reserved for the transport and price subsidies for the items covered by social policies for the population in the mountain areas, on offshore islands and in ethnic minority regions.

Article 19.- Delivery of budget for price and transport freight subsidization for items covered by social policies.

The Commission for Nationalities and Mountain Areas shall assume the main responsibility and coordinate with the Ministry of Planning and Investment, the Ministry of Trade, the Ministry of Finance, and basing itself on the annual targets and the overall budget for price and transport freight subsidies for items covered by social policies for the population in mountain areas, on offshore islands and in ethnic minority regions to allocate budget to the localities according to each item and each area, with first priority given to the areas with difficulties. Basing itself on this plan of distribution, the Ministry of Finance shall assign budget to the localities and branches for implementation.

Article 20.- Management of budget for price and transport freight subsidization.

1. The Ministry of Finance shall coordinate with the concerned ministries and branches to determine the modalities and guide the Finance and Price Service, the Treasury departments and the enterprises to open books of accounts and vouchers, determine the processes and procedures for checking and certifying the results of the selling and buying of the price and transport subsidized goods, and also to determine the time limit for payment of the expenditures in price and transport subsidization and to prevent this payment from dragging out thus affecting the financial situation and business operations of the enterprises.

2. The Commission for Nationalities and Mountain Areas shall assume the main responsibility and coordinate with the Ministry of Trade, the Ministry of Finance and the Price Committee of the Government to check and supervise the implementation of the price and transport freight subsidies of the goods covered by social policies and the selling of goods to the above beneficiaries of preferential policies in each locality and area; to detect and settle problems and difficulties; to report and suggest to the Government necessary policies and measures to ensure the application of the policies to the right persons, really develop its effect toward the stabilization of production and the life of the population in mountain areas, on offshore islands and in ethnic minority regions.

Article 21.- Determining the enterprises to sell items covered by social policies.

The People's Committees in the provinces having mountain areas, offshore islands and ethnic minority regions shall base themselves on the situation and characteristics in communications and habits of the population in each area to decide to apply the form of bidding or the choice of State enterprises fully qualified in terms of network and personnel to assign the task of selling items covered by social policies (excluding medicaments) so that the persons enjoying the preferential policies can buy goods in a convenient way, at the right places and with the prescribed quality and prices and thus can save up on expenditures.

Article 22.- Adjusting the structure and regulating expenditures.

1. The essential goods for the population in mountain areas, on offshore islands and in ethnic minority regions like iodine salt, writing paper for pupils, distribution of books and medicaments must meet the prescribed quantities and under the norms.

Apart from the above-mentioned essential goods, the President of the People's Committee in the province having mountain areas, offshore islands and ethnic minority regions shall base himself on the characteristics and utilization needs of the population in each locality, on the overall budget for price and transport freight subsidies and the budget capacity of the locality to regulate on his own initiative the structure, the level (quantity) and the budget allocated to each item in order to ensure the supply of goods covered by social policies for the people.

2. For a number of areas with exceptional difficulties, if the population do not have the capability to buy goods, the President of the provincial People's Committee, basing himself on the total budget for price and transport freight subsidization allocated to the locality and the budget of the province, shall consider and decide to supply gratis one or a number of these most essential goods: iodine salt, medicaments, and writing paper for pupils.

Section 2- AID TO THE CONSUMPTION OF COMMODITIES PRODUCED IN THE MOUNTAIN AREAS, ON OFFSHORE ISLANDS, AND IN ETHNIC MINORITY REGIONS

Article 23.- Providing transport freight subsidies for the selling of a number of commodities produced in the mountain areas, on offshore islands and in ethnic minority regions.

In order to support the producers in the mountain areas, on offshore islands and in ethnic minority regions to sell their products, maintain and develop commodity production, and contribute to creating the motive force to restructure the local economy, the State shall carry out the policy of transport freight subsidization according to the results of the purchase by traders who directly buy a number of commodities in the agricultural and forestry domains and products processed from agricultural and forestry products (commonly called agricultural and forestry products) produced by organizations and individuals in the mountain areas, on offshore islands and in ethnic minority regions (commonly called producers). Priority shall be given to the purchase of commodities in Region III and Region II in mountain areas, on offshore islands, and in ethnic minority regions meeting with difficulties.

Article 24.- Principles to determine what products shall receive transport freight subsidies:

1. The determination of the commodities to receive transport freight subsidies shall follow the following principles:

a/ Where commodities produced in Regions III and II hold the largest proportions compared to other commodities in the region or products of which the consumption has an important effect on the stability of life and encourages production activities of the population in the region.

b/ Newly formed products thanks to the implementation of the production plan in the structuring of the economy along the direction of producing commodities and creating products to take part in export.

c/ Products intended as substitutes for those which are banned from production (such as poppy plants) or the production of which is not encouraged.

2. On the basis of the situation and the requirements for socio-economic development in mountain areas, on offshore islands and in ethnic minority regions and the proposal of the People's Committees in different localities and the related Ministries and branches, the Commission for Nationalities and Mountain Regions in coordination with the Ministry of Trade and the Ministry of Agriculture and Rural Development shall submit to the Prime Minister for decision and announcement of the list of commodities which need to be subsidized in transport freight for their purchase in the localities in the mountain areas, on the offshore islands and in the ethnic minority areas in each period.

Article 25.- Transport freight subsidies for traders who directly buy and consume commodities.

1. Encouraging traders of all economic sectors to directly purchase and consume commodities produced by the population in mountain areas, on offshore islands and in ethnic minority regions. The State shall provide transport subsidies for traders who directly purchase commodities in mountain areas, on offshore islands and in ethnic minority regions correspondingly to the actual quantity of goods already purchased.

2. The distance enjoying transport freight subsidies in the purchase and consumption of commodities produced in mountain areas, on offshore islands and in ethnic minority regions (according to the list of commodities already announced) shall be the distance from the center of the group of communes to the nearest town or city in the plain.

The Ministry of Trade shall assume the main responsibility in determining the nearest towns and cities in the plain to calculate the subsidized distances in each province as basis for the calculation of expenditures for transport freight subsidies.

3. In order to be subsidized in transport freight, a trader shall, before purchasing or consuming commodities (which are subsidized in transport freight), draw up a concrete business plan and submit it to the President of the provincial People's Committee or the agency appointed by the President of the provincial People's Committee for consideration.

4. The Ministry of Finance shall stipulate the modalities to determine the quantity of commodities directly purchased from the population or through the cooperative shops in the area of the group of communes as basis for calculating the volume of commodities to be subsidized in transport freight.

Article 26.- Assigning plan and budget in support of the purchase and consumption of commodities.

1. The budget for the subsidization of transport freight in the purchase and consumption of a number of commodities produced in mountain areas, on offshore islands and in ethnic minority regions shall be deducted from the Central Budget in order to allocate to the provincial People's Committee in the form of "mandatory budget."

2. The Price Committee of the Government shall assume the main responsibility and together with the Ministry of Trade set the unit price for transport freight subsidy for each commodity in each locality and region.

3. The Commission for Nationalities and Mountain Areas shall assume the main responsibility and coordinate with the related Ministries and branches and the provinces belonging to or having localities which are mountain areas, offshore islands or ethnic minority regions to work out the plan and measures to purchase and consume commodities in each region and locality in each specific period; monitor, inspect and direct the localities and units in the implementation of the measures to buy and consume commodities by the producers so that the subsidization of transport freight conforms with the commodities and the beneficiaries, thus creating a motive force to promote commerce and the socio- economic life in the mountain areas, and encourage the population to develop production.

4. The Ministry of Planning and Investment shall assume the main responsibility and coordinate with the Commission for Nationalities and Mountain Areas and the Ministry of Finance in providing the budget from the annual State budget to carry out this objective.

5. Basing itself on the total budget already approved and the list of commodities to be purchased and consumed, the Commission for Nationalities and Mountain Areas shall assume the main responsibility and coordinate with the Ministry of Trade, the Ministry of Planning and Investment and the Ministry of Finance in allocating the budget for transport freight subsidization. On the basis of the said plan of allocation, the Ministry of Finance shall allot budget to the mountain provinces, offshore islands and the provinces inhabited by ethnic minorities covered by this policy for implementation.

6. The Commission for Nationalities and Mountain Areas shall assume the main responsibility and coordinate with the Ministry of Trade, the ministries, specialized branches and localities, select a number of localities and specific lines of goods to conduct an experimentation and draw experiences to carry out transport freight subsidization in consumption and buy a number of goods produced in mountain areas, offshore islands and ethnic minority regions as prescribed in Articles 24, 25 and 26 of this Decree in an active and efficient way.

Article 27.- Checking the implementation of the price and freight subsidy policy.

1. The Presidents of the People's Committees in the provinces shall direct and organize the periodical inspection of the implementation of the price and freight subsidy policy, the allocation and use of the budget for price and freight subsidy to each sale point as prescribed by this Decree, and to ensure that the population of each area in mountain areas, on offshore islands and in ethnic minority regions can buy items covered by social policies with the right quantities and at the prescribed places, ensure the fight against wastefulness and losses to the State budget. They shall have to take responsibility before the Prime Minister for the result of the implementation.

2. Each year, the Commission for Nationalities and Mountain Areas shall take the main responsibility and together with the Ministry of Trade, the Ministry of Planning and Investment, the Ministry of Finance and the Price Committee of the Government and the related Ministries and branches, inspect the organization of the implementation by the managing agencies and enterprises in order to detect in time the questions which need handling and report them to the Prime Minister.

Chapter IV

STATE ENTERPRISES CONDUCTING COMMERCIAL ACTIVITIES IN MOUNTAIN AREAS, ON OFFSHORE ISLANDS, AND IN ETHNIC MINORITY REGIONS

Article 28.- Developing and strengthening State commercial enterprises and commerce-service cooperatives in mountain areas, on offshore islands and in ethnic minority regions.

1. Developing and consolidating State enterprises in mountain areas, on offshore islands and in ethnic minority regions in order to buy products and sell materials in service of production and consumer goods to the population of ethnic minorities in mountain areas, on offshore islands and in ethnic minority regions, and supplying goods covered by social policies.

The State commerce service must establish its network down to the centers of the groups of communes in mountain areas, on offshore islands and in ethnic minority regions. Developing the commerce-service cooperatives and using the State economic organizations (State factories, State farms and forestry establishments) and other forces of the State and prestigious persons in the villages and hamlets as buying and selling agents for State enterprises, including commodities covered by the price and freight subsidies policy.

2. The Ministers of the Ministries managing the branches, the Presidents of the provincial People's Committees shall have to develop and consolidate the State enterprises, organize and direct the forces of the State in their respective branches and localities for coordination and support to the State commercial enterprises in broadening goods circulation in the mountain areas, on offshore islands and in ethnic minority regions and carrying out the policy of ensuring goods covered by social policies and marketing commodities.

Article 29.- Public utility enterprises engaged in commercial activities in mountain areas, on offshore islands and in ethnic minority areas.

State commercial enterprises operating chiefly in Region III of mountain areas, offshore islands and ethnic minority regions which meet all the conditions defined in Item 2, Article 2 of Decree No.56-CP of October 2, 1996 of the Government may be considered for changing to the form of public utility enterprises in order to operate in the public utility sector in the mountain areas, on offshore islands and in ethnic minority regions, according to the legislation on public utility enterprises.

Article 30.- Capital for State commercial enterprises operating in mountain areas, on offshore islands and in ethnic minority regions.

1. The State commercial enterprises in mountain areas, on offshore islands and ethnic minority regions shall be assured 50% of its need in working capital. If their working capital still is below that level, they may ask the competent agency to approve the supplementary allocation of capital as prescribed by the Budget Law.

2. The State commercial enterprises shall be granted enough reserve capital for the items covered by social policies. Depending on the locality and specific items, the average reserve to ensure the consumption needs of the mountain areas, offshore islands and ethnic minority areas for from two to three months. The enterprises shall be exempted from the payment for the use of capital with regard to the capital allocated for the purchase of reserve in items covered by social policies.

3. The Ministry of Trade and the Ministry of Finance shall take the main responsibility and shall coordinate with the related Ministries and branches in determining concrete steps to carry out the provisions of Item 1 and Item 2 of this Article.

Article 31.- Support for capital lending.

The State commercial enterprises in mountain areas, on offshore islands and in ethnic minority regions can make medium and long term loans from State credit sources (including the national fund in support of investment) at the most preferential rate to invest in more business points in service of the areas in mountain regions, on offshore islands and in ethnic minority regions especially in Region III and in expanding the commercial businesses or production and business centers.

Chapter V

IMPLEMENTATION PROVISIONS

Article 32.- Implementation effect.

This Decree takes effect 15 days after its signing. The earlier provisions which are contrary to this Decree are now annulled.

Article 33.- Guidance for implementation.

1. The Ministers-Chairman of the Commission for Nationalities and Mountain Areas shall base himself on the accreditation of the Prime Minister to determine the areas in mountain regions, on offshore islands and in ethnic minority regions and the demarcation of mountain areas, offshore islands and ethnic minority regions (Region I, Region II and Region III) to serve as basis for the application and implementation of the provisions of this Decree.

2. The Minister of Trade shall assume the main responsibility and coordinate with the Minister of Planning and Investment, the Minister of Finance, the Minister of Health, the Governor of the State Bank, the Minister-Chairman of the Commission for Nationalities and Mountain Areas, the Head of the Price Committee of the Government, the Presidents of the People's Committees in the mountain provinces, on the offshore islands and in the provinces having ethnic minorities shall have to guide and organize the implementation of this Decree.

Article 34.- Responsibility of implementation.

The Ministers, the Heads of ministerial-level agencies, the Heads of the agencies attached to the Government and the Presidents of the People's Committees of the provinces and cities directly under the Central Government shall have to implement this Decree.

On behalf of the Government

For the Prime Minister

Deputy Prime Minister

NGUYEN TAN DUNG